The Autumn 2024 UK Budget brings mixed outcomes for the charity sector. We’ve outlined some key takeaways below:
Increased costs due to wage increases
- Rising expenses: With the increase in minimum wage rates and higher employer National Insurance contributions, charities employing lower-wage workers are likely to feel greater financial pressure. This additional cost burden, without any targeted financial relief, raises sustainability concerns for many charitable organisations in the long term.
- Mixed outcomes for the sector: While the wage hike benefits low-paid workers, it places further strain on charities already grappling with rising costs and high service demand.
Calls for reimbursement support
- Advocacy efforts underway: Sector leaders are pushing for reimbursement to help cover increased employment costs, a move that could offer vital relief if the government responds positively.
Increased public sector funding
- Core services investment: The Budget increases local government funding and allocates new resources for social care, housing, and education, including special educational needs. There is also a substantial boost to the health budget.
- A shift in government strategy: This investment in public services could ease demand on charities that often step in to cover gaps in support.
Potential for reduced demand on charities
- Improving living standards: By raising the minimum wage and bolstering public service funding, the budget aims to address root causes of financial hardship and health inequalities. Over time, this could lessen demand for charity services as more community needs are met directly.
New social impact investment vehicle
- Addressing complex social issues: The government has introduced plans for a social impact investment vehicle to tackle entrenched social challenges, with charities expected to play an advisory role in its development. Further details are anticipated soon, offering the sector a potential pathway for collaboration.
Enhanced charity commission funding
- Strengthening oversight and support: The Charity Commission for England and Wales will receive an additional £1.5 million in annual funding, which should enable enhanced support and oversight, contributing to the sector’s resilience.
Charitable giving and legacy donations
- Opportunities amid Capital Gains Tax (CGT) increases: With CGT on the rise, some investors may divest assets before the increase, potentially boosting charitable giving as a tax-saving strategy. The retention of inheritance tax reliefs for charitable bequests is also encouraging, as legacy donations remain a crucial support source. As inheritance tax thresholds impact more estates, this relief could have an even more significant effect.
Renewed government collaboration with charities
- A spirit of partnership: The budget indicates a greater willingness by the government to engage with the charity sector, suggesting potential for increased collaboration in the future.
Summary
While the budget presents cost challenges, particularly in employment-related areas, it also brings opportunities through public funding, social investment, and legacy giving incentives. Together, these initiatives could pave the way for a more supportive environment for charities and the communities they serve.
Further reading: A closer look at some key UK Budget 2024 highlights and their potential impacts for sustainable investors.
